Julius Baer may cut jobs after Merrill Lynch purchase

Bloomberg

Wed, Oct 10, 2012 - Page 15

Julius Baer Group Ltd, the Swiss private bank established in 1890, may cut more than 1,000 jobs as it integrates Bank of America Corp’s non-US Merrill Lynch wealth units.

Julius Baer is targeting a reduction of 15 percent to 18 percent in the combined workforce of about 5,700, the Zurich-based company said yesterday in a statement.

The Merrill business that Julius Baer agreed to buy in August posted a first-half loss of US$30.4 million, the bank said.

Julius Baer is boosting client assets to compete with larger rivals UBS AG and Credit Suisse Group AG as a crackdown on tax evasion pushes customers to repatriate funds from Swiss offshore accounts.

While the firm expects the acquisition to boost earnings from 2015, profit may be “somewhat volatile” over the next two years.

Julius Baer previously said it expects to pay as much as 860 million Swiss francs (US$921 million) for between SF57 billion and SF72 billion francs of assets managed for Merrill clients from Europe, Asia, Latin America and the Middle East.

The total cost of the transaction, including integration costs and incentives to retain relationship managers, will be about SF1.47 billion, the bank said in August.

Assets under management at Julius Baer increased to SF184 billion at the end of August from SF178.8 billion at the end of June after net inflows that were close to the top of the firm’s 4 percent to 6 percent target range, the company said.

The gross margin, a measure of profitability, was “slightly lower” in the first eight months of this year than the 98 basis points reported for the first half.